Börsipäev 7. november

BofA resumes Microsoft (MSFT 28.84) with a Neutral and $31 tgt, as they see few catalysts on the horizon to materially drive shares higher over the coming months, and believe a neutral rating is appropriate until the market begins to look beyond Vista and profitability in newer initiatives begins to drive improved operating leverage

Prudential initiates E*Trade Financial (ET 23.27) with an Overweight and $30 tgt, based on the expansion of its non-U.S. franchise, its bank-like characteristics and below peer valuation

Merriman upgrades Wells-Gardner Electronics (WGA 3.28) to Buy form Neutral, based on a much improved macro outlook for gaming expansion, a quickening of the replacement cycle in slots, traction in direct replacement sales, and Q306 results that show further improvement in margins

ThinkEquity upgrades RealNetworks (RNWK 10.87) to Buy from Accumulate and raises tgt to $13 from $12, based on solid Q3 results and believe the co is well positioned to capitalize on consumers migrating their digital consumption habits beyond the PC and mp3 players

Friedman Billings downgrades Ann Taylor Stores (ANN 38.94) to Market Perform from Outperform and $39 tgt, based on comp and gross margin comparisons that are becoming increasingly difficult, merchandise at the Loft division that may not be resonating as strongly with its customer base and the risk/reward isn't as compelling at current levels

Credit Suisse initiates the Managed Care Industry saying their outlook on the managed care industry is largely shaped by the strategy and business mix of each co. The firm maintained a negative view on the commercial group insurance business and advise investors to underweight the stocks of companies that are highly levered to this market. They maintain a positive bias toward companies focused on the emerging growth opportunities within the Medicare and Medicaid market segments. On Commercial Managed Care, they are taking a negative stance based on their expectation that cost trends are set to moderate into the mid-single digits and that premium growth rates will follow. The firm says with industry-wide enrollment growth non-existent and margins at or near cyclical peaks, they believe commercial managed care growth rates are set to decelerate from the midteens to the high single digits. The firm initiates WellCare Health Plans (WCG) tgt $76, Centene Corp (CNC) tgt $30, UnitedHealth (UNH) tgt $56 with Outperforms; Molina HealthCare (MOH) tgt $42, Magellan Health Services (MGLN) tgt $47, Well Point (WLP) tgt $80, CIGNA (CI) tgt $125, with Neutrals. The firm also initiates Amerigroup Corp (AGP) tgt $27 and Aetna, Inc. (AET) tgt $37 with Underperforms.

"People vote their resentment, not their appreciation. The average man does not vote for anything, but against something."

--William Bennet Munro

Americans go to the polls today to let the politicians know how unhappy they are with the current state of affairs. Elections tend to be about voting against something rather than for something, and that means the party in power tends to suffer the most. So the Republicans are widely anticipated to lose the House but to narrowly hold on to the Senate. The big question for us isn't who wins or losses but whether it makes any difference to the stock market.

The answer is it probably won't matter unless something really surprising happens and one party or the other makes a particularly strong showing. If the Democrats manage to take control of the Senate it would probably be a market negative as Wall Street sees their agenda as raising taxes and more vigorous oversight of big business. If the Democrats take control of the House as expected the biggest change will be that they have the subpoena power of committees and that means we could see a series of investigations in an attempt to gain political advantage. The market probably doesn't care too much about that but it can be a distraction if they go after key industries like drugs and oils.

If the Republicans do better than expected the market may be pleased but at best we continue the status quo. The great likelihood is that we end up with gridlock and that tends to make many happy because it means government won't be able to meddle as much.

The market has probably already figured this all out. What happens after the election has much more to do with the psychology that has developed that it does with the ultimate results. For example, the big rally yesterday sets up a dynamic that increases the chances of some selling after the election. People now have more gains and stocks are more extended, so they are more inclined to look for reasons to sell and lock in profits.

Many market participants focus so much on whether news is positive or negative that they fail to understand that it's the context that is more important. Whether we go up or down on the election depends more on where we've been and how we got there than on the actual news itself.

We are entering Election Day with a technical setup that will make much further upside fairly difficult. Last week we finally managed to break the several month long uptend and then yesterday we popped back up on lackluster volume. Although the points gained were quite substantial and breadth quite good, the volume was unimpressive. That doesn't mean the bounce won't continue but it does make it suspect.

One of the things that continues to favor the bulls is that much of the buying seems to be driven by large institutions that are allocating giant chunks of capital to big caps. Stocks like CSCO and AAPL are leading the charge and the focus seems to be more on getting in than buying cheap. If big institutions continue to receive cash they will continue to buy and trying to guess when it stops is nearly impossible.

The market is always a balancing act and we have plenty of negatives and positives out there right now. I'm leaning toward the proposition that we have another dip coming but the timing is key and we have to watch how the election results kick in and affect psychology.

We have a neutral start to the day setting up. Overseas markets followed through over night and oil and gold are close to unchanged.

Toll Brothers reports preliminary Q4 and FYE2006 home building revenues, backlog and contracts (28.05 ) : Co reports preliminary results for home building revenues, backlog and contracts for Q4 and FYE2006. For Q4, home building revenues were approx $1.81 bln compared to the Q4 record of $2.01 bln in FY05; quarter-end backlog was approx $4.49 bln compared to the Q4 record of $6.01 bln in FY05; and signed contracts during the quarter were approx $710 mln compared to the Q4 record of $1.59 bln in FY05. Home building revenues, backlog and contracts declined 10%, 25% and 55%, respectively, compared to FY05's record Q4 results. The co's quarterly contract total was negatively impacted by a higher than normal 585 cancellations. The Q4 cancellations measured approx 7% of beginning Q4 backlog, compared to 4% in its Q306. Viewed as a percentage of contracts signed in Q406, cancellations totaled 37%, compared to 18% in Q306. For the full 2006 fiscal year, record home building revenues rose 6% to approx $6.12 bln, compared to $5.76 bln in FY05, the previous record. Signed contracts were approx $4.46 bln, a decline of 38% compared to the fiscal year record of $7.15 bln in FY05.

Beazer Homes beats by $0.30, guides FY07 EPS well below consensus (41.94 ) : Reports Q4 (Sep) earnings of $2.19 per share, $0.30 better than the Reuters Estimates consensus of $1.89; revenues rose 3.8% year/year to $1.88 bln vs the $1.49 bln consensus. Co issues downside guidance for FY07, sees EPS of $3.65 vs. $4.67 consensus. Co sees FY07 home closings of 12-13.5k with new orders of 12-14k. Co's FY07 EPS guidance is based on high-end of home closings guidance of 13.5k. Co states, "The company has not provided a diluted earnings per share estimate for the 12,000 unit level of closings as there is insufficient visibility to assess the level of margins, the potential for additional impairments, or further overhead reductions required at this volume level".

BB&T notes that yesterday SWFT received a buyout offer from founder and former CEO Jerry Moyes, the second buyout offer in the truckload space in less than two months (in late Sept Liberate Tech offered to take USAK private for $21/share). Firm believes that more deals could be on the horizon, as truckload multiples have contracted recently while most carriers maintain a solid financial position and continue to grow earnings. While it is impossible to predict which truckload carrier will be next, firm thinks that a potential deal could benefit any of their Buy-rated names that do not have a deal pending: CLDN, JBHT, and KNX.

Lehman raises their tgt on select Oil stocks - Some of the larger tgt raises are CVX to $92 from $63, XOM to $81 from $71, HES to $44 from $26, PCA to $50 from $36, PBR to $81 from $63, SU to $85 from $48.

The market has been surprisingly strong this morning given the uncertainties of tonight's mid-term election. Conventional wisdom is that the Democrats have a good shot at taking back the House tonight, although recent polls suggest Republicans will hang onto the Senate. The stock market doesn't seem to have much conviction regarding the outcome though, or seems to be anticipating little overall change from the election, as those groups widely considered winners if Democrats pick up seats (alternative energy, stem cells, GSE's, etc) and losers (tobacco, defense, oil, healthcare) are generally not showing any clear direction -- although a number of Alternative Energy stocks are catching a bid (SPWR, STP, WFR)... One thing to watch for this afternoon is the possibility of a repeat of the "exit poll surprise" in the 2004 presidential election, when the market sold off sharply in the final hour when exit poll numbers were leaked that purported to show a Kerry landslide. In short, the final 1-2 hours of the session could be very volatile if someone again decides to leak some numbers showing the election swinging one way or the other